The government is set to reinstate tax benefit for certain corporate bank depositors, exempted from mandatory submission of tax returns, and also for exporters to allow them to enjoy source tax at reduced rates, officials said.
Source tax on cash incentives for exporters was 10 per cent, which was considered finally paid tax on the income under the Income Tax Ordinance 1984.
In the Income Tax Act 2023, the National Board of Revenue (NBR) waived the provision.
Tax liability of the exporters would go up under the current provision, as they would require paying income tax on the amount of cash incentives at 27.5 per cent rate, tax officials said.
Also, source taxes paid against the interest amount of Deposit Pension Scheme (DPS), fixed deposits, etc, would not be considered as finally paid taxes under the new move, they noted.
The Bangladesh Bank, government's provident fund and pension fund, expatriates having no fixed-base in Bangladesh, local authority, MPO-listed educational institutions having no English curriculum, public university, state-owned corporation, government authority or autonomous body, having no income except interest income from bank deposit or government fund, would be entitled for the benefit.
The National Board of Revenue (NBR) collects source tax at 10 per cent from the bank deposit holders, having Taxpayers Identification Number (TIN), and 15 per cent from those without TIN.
Under the tax law, taxpayers can adjust the paid tax with their actual payable income tax.
A senior tax official said taxpayers, exempted from submission of tax returns under 166(2), are not required to submit returns. So, they cannot adjust the paid source tax with their income.
In the new act, the government has waived the provision and incorporated new ones to add the income derived from cash incentives against export proceeds.
With the new provision, income of an export-oriented company against cash incentives would be added to its actual payable tax, if it has other sources of income.
Addressing the increased tax liability on certain bank depositors and exporters, the NBR recently sent a draft statutory regulatory order (SRO) for vetting of the law ministry.
The NBR proposed to make source tax as 'final settlement' or finally paid tax again as the taxpayers used to enjoy in the previous law.
It also included the source tax on interest amount of the government's savings instruments.
After reinstating the previous provision, bank depositors, investors of the savings instruments and exporters would not require to pay additional tax on the said income apart from source tax.
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